Lion’s flexible over Bravo

CEO denies that Kerkorian will drop price of MGM to sell it

MGM CEO Alex Yemenidjian said Thursday that he’d probably sell the Lion’s 20% stake in Bravo if NBC bought the net. But he’s also open to boosting MGM’s holding in Cablevision-owned Rainbow in partnership with NBC or in buying the networks outright if the price is “reasonable.”

“Our objective was always to own more than 20% of those assets because we like them so much. At the same time, I think it’s important to keep the discipline of not overpaying,” Yemenidjian told investors at the Goldman Sachs media conference in Gotham.

Last year, MGM paid $800 million for 20% of Rainbow cable nets Bravo, IFC, AMC and WE. Cablevision is now in dire financial straits and will probably sell the channels.

Some on Wall Street pilloried that deal, but it may work out just fine for MGM, which will either be part of a lucrative cable franchise or collect a tidy sum. “Whatever happens, MGM shareholders will win,” he said.

MGM can’t veto a Cablevision deal, but must be part of it. “We have the right to tag along (in a sale), and they have the right to drag us along,” he said.

He adamantly denied a report that Kirk Kerkorian is willing to drop the price of MGM to sell it. “We got close once to combine our library with one that would have been the ultimate content company,” he said, referring to negotiations with Sony that broke down over governance issues. “Now it’s not for sale.”

Yemenidjian predicted MGM will produce $800 million of free cash flow from 2003 to 2006.

He said MGM’s stock price is well below the value of its assets and the Lion will be aggressively buying back shares.

MGM’s main asset is its giant library of 4,000 titles. Asked why the company produces films instead of just managing its library, he said a library biz with no current releases “loses gas. You need to refresh it. Titles are sold in packages and packages need drivers.” He acknowledged the first six months of the year were disappointing pic-wise but has justifiably high hopes from the next James Bond, “Die Another Day,” due out next month.